First projects awarded funding under Japanese CfD scheme

METI funds hydrogen for steel and ammonia production

As part of the government-wide Green Transformation (GX) scheme, two hydrogen producers have been selected to receive subsidies for low-carbon production projects. Out of the overall $1 trillion GX scheme, $51 billion is earmarked for hydrogen and ammonia investments, with the bulk going towards a long-term contracts for difference (CfD) program that subsidises the increased production costs. More announcements are expected in the coming months, but the first two recipients are a Toyota Tshuho-led consortium (electrolytic hydrogen for steel), and Resonac (hydrogen from used plastics for ammonia).

Click to learn more. Resonac is one of the first two winners in Japan’s hydrogen CfD scheme, and will manufacture ammonia for chemical giant Nippon Shokubai.

Both will be funded by the “Support focusing on the price gap” program under the “Act on Promotion of Supply and Utilization of Low-Carbon Hydrogen and its Derivatives for Smooth Transition to a Decarbonized Growth-Oriented Economic Structure”, administered by the Ministry of Economy, Trade and Industry (with support from JOGMEC). In the program, production projects are required to have the support of a major hydrogen consumer – in Resonac’s case, this is Japanese chemicals giant Nippon Shokubai, who will offtake the ammonia produced from lower-carbon hydrogen.

Kawasaki Plastic Recycling plant: operational since 2003

Click to learn more. Hydrogen from used plastics at Resonac’s Kawasaki Plastic Recycling plant facilities was used to produce ammonia fuel for the first A-Tug bunker demo in July 2024. Source: Resonac.

Operational since 2003, Resonac’s Kawasaki Plastic Recycling (KPR) Plant gasifies used plastics and other materials at high temperatures, breaking them down to produce (amongst others) hydrogen and carbon dioxide. The hydrogen is then mainly used as feedstock for ammonia production within Resonac, which is then used in synthetic fibers, resins, chemical fertilizers, and as denitrification agents for thermal power plants. In 2023, Resonac obtained ISCC PLUS certification for three products – hydrogen, ammonia, and acrylonitrile – partially derived from used plastics at Kawasaki.

Ammonia produced by Resonac via this pathway was also supplied to NYK Line for the first A-Tug bunker exercise in Yokohama. The carbon dioxide is utilized as raw material for dry ice and carbonated beverages. In 2022, Resonance reported that the cumulative amount of processed plastics at KPR had exceeded one million tons.

On the back of the awarded subsidies, Resonance has now made the decision to produce ammonia in Kawasaki only utilizing hydrogen from used plastics (hydrogen is also currently produced from city gas onsite). This will be achieved by developing and introducing new processes based on existing operations at KPR. In 2024, Resonac also began demonstration experiments using not only used plastics, but used textiles as feedstock. The “new facilities” for hydrogen production are scheduled to begin operation in April 2030.